The Chinese, so the theory goes, will buy Western goods until they have cloned home-grown versions. Indian consumers, on the other hand, are more enthusiastic about Western brands.
On the media front, India's adspend is expected to rise 15.5 per cent this year to $3.6 billion, according to Initiative's annual forecast, with massive growth for the internet at 35 per cent and even the press, which is expected to grow 14.2 per cent. The Indian government is also busy sorting out the country's messy, quasi-corrupt cable and satellite sector.
It is against this backdrop that Interpublic has merged two of its media agency brands in the country: Lodestar and Universal McCann. The newly formed Lodestar Universal immediately jumped to the number-two slot in media agency rankings, with billings estimated at 10 billion rupees ($215 million), after Group M.
As well as large Indian clients such as the Tata Group (auto- motive, telecoms and IT), Amul (food), the Mahindra Group (trade and financial services) and Nerolac (paints), it will represent multinationals such as L'Oreal, Microsoft, Intel, MasterCard, Whirlpool and SC Johnson.
The outfit will be headed by Shashi Sinha, the founder of Lodestar. "The Lodestar Universal branding makes sense because while Universal is the media engine of the IPG group, Lodestar is better-known in India," he says.
Lodestar is a successful agency in India, with growth of between 40 and 45 per cent over the past two years, according to the India Economic Times. But Universal has struggled to make its presence felt in the market.
Strategically, however, the company is still stronger in the northern region centred on New Delhi, while Lodestar is focused on Mumbai and the south. Notably, out of the four executives who will drive Lodestar Universal, only one, Anamika Mehta, who heads the New Delhi office, comes from Universal McCann.
Meanwhile, Vikram Sakhuja, the chief operating officer of the rival Group M, welcomes the merger. "This should help drive accountability, and also help media agencies become more valued by clients," he says. But he adds: "We are clearly (still) number one. As per Recma, Group M accounts for more than 40 per cent of the media released through measured agencies, with MindShare accounting for more than 23 per cent of the market."
As well as shortening the gap between Universal and Group M, the merger also gives the network access to the proprietary technologies Lodestar has developed to track Indian media consumption. Sinha says: "We set up the Lodestar Labcentre in 2000 to develop not only proprietary tools and techniques, but also to carry out analytics and modelling for clients. The merger will allow us to invest further in Labcentre, with a focus on emerging media."
Well known for their love of films, Indians remain avid consumers of the press, which, according to Initiative, attracts adspend of about $1.9 billion. "Internet penetration is growing but is limited to offices and middle-class homes. There is a connectivity and affordability issue. So the Indian press remains as vibrant as ever," Sinha says. Experiential marketing does too: clients such as L'Oreal and Tata still rely on face-to-face contact to win over new consumers.
But the hottest story is in TV, as the government tries to rein in the rapid proliferation of channels with its new Cable & Satellite Bill. Sinha says: "We have seen an explosion of some 250 channels for 65 million cable and satellite homes. Yet few consumers receive satellite TV directly via a dish; the channels are supplied by a number of cable operators, not all of whom provide a good deal for the consumer."
Nor do the distributors hand channels a fair share of the profit. Indeed, some cable operators are said to under-declare subscription revenue by as much as 80 per cent. The new law will stabilise subscription prices and limit the amount of ads per hour.
"Probably it will be fixed at ten minutes per hour, as opposed to the 15 minutes on certain channels. The cost of slots could rise," Sinha says.
"Many distributors were not dependent on advertising revenue before, because of their inflated subscription prices. However, a properly regulated TV landscape is good in the long term," he adds.
For his part, Sakhuja says that "nobody is holding their breath" over the new legislation. "The government has been trying to enforce a conditional access system, in which set-top boxes would be installed in individual homes. Ground-level implementation has proved difficult, although the High Court has set the end of the year as a target."
Despite all these problems, Sinha warns it would be wrong to consider India a cowboy media market. "It is a mature market, with strong advertising institutions, best practices in research and planning, talent, a proliferation of media and a good mixture of strong local and international clients," he says.
"However, our advertising-to-GDP ratio is just 0.5 per cent. This is not owing to lack of volumes: with more than 250 TV channels there's huge fragmentation. But rates are rock-bottom because of competition for now."
He predicts that, aided by a strengthening of the rupee against the dollar, adspend could grow threefold over the next five years. "Then the world will take notice."